The Board of Murray & Roberts Holdings Limited (Board) is committed to and fully endorses the principles of the Code of Corporate Practices and Conduct (Code) as set out in the King Report on Corporate Governance for South Africa 2002 (King II). In supporting the Code, the Board recognises the need to conduct the business of the Group with openness, integrity and accountability. A corporate governance framework has been in operation in the Group for many years and is reviewed from time to time and updated where appropriate. The Board is satisfied that the main principles of the Code have been implemented.

The Board is committed to the highest standards of corporate governance and has already begun taking steps to implement the King Report on Governance for South Africa 2009 (King III) which must be complied with in respect of financial years commencing on or after 1 March 2010. Sound governance principles remain one of the top priorities of the Board.

Board of directors

At the date of this annual report, Murray & Roberts has a unitary Board with 16 directors, 11 of whom are independent non-executive and five executive.

The Board is responsible for approving the strategic direction of the Group and is governed by a charter that sets out the framework of its accountability, responsibility and duty to the company. The Board is committed to corporate governance best practice above the minimum requirements set by the Code.

The Board conducts its business in the best interest of the company and ensures that the Group performs in the best interests of its broader stakeholder group, including present and future investors in the Group, its customers and clients, its business partners, employees and the societies in which it operates.

In order to address its accountability and responsibility, the Board:

provides ethical leadership and gives direction to the Group in all matters and approves the strategic plan developed by management in the context of the board charter
monitors implementation of the strategic plan by management
acknowledges that strategy, risk, performance and sustainability are inseparable by:
– monitoring key risk areas and key operational performance areas of the company
– ensuring that the strategy will result in sustainable outcomes
– considering sustainability as a business opportunity that guides strategy formulation
directs the commercial and economic fortunes of the company
ensures the company is a responsible corporate citizen by considering the impact of the business operations of the company on its people, society and the environment
monitors that the company complies with all relevant laws, regulations and codes of business practice, considers adherence to non-binding rules and standards
the company communicates with all relevant stakeholders (internal and external) openly and promptly and with substance prevailing over form
defines levels of materiality, reserving specific powers to itself and delegating other matters by written authority to management
monitors performance through the various board committees established to assist in the discharge of its duties without abdicating its own responsibilities
ensures directors act in the best interest of the company by adhering to legal standards of conduct, disclosing real or perceived conflicts to the Board and dealing in securities only in accordance with a developed policy
determines policy and processes to ensure the integrity of:
– risk management, effective risk-based internal audit and internal controls
– executive and general remuneration
– external and internal communications
– director and chairman selection, orientation and evaluation

Directors adhere to a Code of Conduct which incorporates agreed standards of accepted behaviour and guidance in decision making, promotes integration and coordination and reaffirms the directors’ commitment to the Group.

The independent non-executive directors complement the executive directors through the diverse range of skills and experience they bring from their involvement in other businesses and sectors. They bring independent perspectives on corporate governance and general strategy to the Board as a whole.

During the year, non-executive directors were paid an annual retainer of R150 000 each with a deduction for non-attendance of R13 000 per meeting. Five scheduled and two special meetings were held during the year. Non-executive directors were paid R26 000 per special board meeting.

Based on a review of non-executive directors’ fees undertaken during the year, it is proposed that shareholders approve a revised remuneration structure, at the annual general meeting on 27 October 2010, that non-executive directors be paid a fixed annual fee of R160 000. The deduction for non-attendance and ad hoc fee for special board meetings increases to R14 000 and R27 500 respectively.

The proposal is based on a minimum of five scheduled meetings a year and takes into account additional committee workload.

Board meetings

The Board meets at least five times a year in formal meetings. In addition, the directors meet ahead of the scheduled meeting at which the Group’s budget and business plan is examined in the context of the approved strategy.

At this meeting, senior executives in the Group engage with the directors in a broad conversation on implementation of the Group’s strategy. The Board has adopted a policy to visit key operations on an annual basis. All directors are kept informed between meetings of major developments affecting the Group. The record of attendance by each director at the board meetings held during the year under review is reflected in the table on page 123 of this report.

Changes to the board

The Board appointed executive directors MP Chaba, TG Fowler and O Fenn with effect from 1 September, 25 September and 20 November 2009, respectively.

Non-executive director WA Nairn was appointed with effect from 30 August 2010.

SJ Flanagan resigned as an executive director of the company and employee of the Group with effect from 31 January 2010.

Chairman and group chief executive

The roles of chairman and group chief executive are separate and they operate under separate mandates issued by the Board that clearly differentiate the division of responsibilities within the company ensuring a balance of power and authority.

The chairman, who is an independent non-executive director, presides over the Board, providing it with effective and directed leadership and ensuring that all relevant information and facts are placed before the Board for decision. The group chief executive is charged with responsibility for the ongoing operations of the Group. He develops the Group’s long term strategy and recommends the business plan and budgets to the Board for consideration.

The group chief executive and the chairman are appointed by the Board. The Board is responsible for the annual appraisal of the chairman and the remuneration & human resources committee is responsible for the annual appraisal of the group chief executive.

The remuneration & human resources committee assesses the remuneration of the Board, chairman and group chief executive and the nomination committee is responsible for succession planning of the Board.

Board committees

The Board has established and mandated a number of permanent standing committees to perform specific work on its behalf in various key areas affecting the business of the Group. These committees are:

executive
audit
health, safety & environment
nomination
remuneration & human resources
risk management
social & ethics

The committees assist the Board in the discharge of its duties and responsibilities without abdicating its own responsibilities.

The Board and each committee give attention to both new and existing matters of governance and compliance within their respective mandates. A statement from the chairman of the Board and chairman of each committee is included in this annual report.

Each committee operates according to Board-approved terms of reference. With the exception of the executive committee, all other committees are chaired by an independent non-executive director of the Board.

There is a full report-back from each committee chairman to the Board at each board meeting. Each committee chairman attends the annual general meeting and is available to respond to shareholder questions on committee activities.

For the period under review, all committees, with the exception of the social & ethics committee which was established on 1 July 2010, conducted a self assessment to evaluate their effectiveness. The outcome was positive. All committee terms of reference were reviewed and updated during the year.

The record of attendance by each member of the respective committees for the year under review is reflected in the tables on page 123 of this report.

The Board approved the formation of a social & ethics committee in terms of the draft Companies Amendment Bill 2010. The committee met for the first time on 24 August 2010. After a year, the committee’s merits will be reviewed.

Selection of directors

The Board has approved a policy on the criteria for the selection and continuation of office for directors and the nomination and evaluation processes to be followed.

The nomination committee considers and makes appropriate recommendations regarding appointments and re-election of directors to the Board. This process encompasses an evaluation of skills, knowledge and experience, considers transformation imperatives and ensures the retention of appropriate long term memory on the Board. All recommended appointments and re-election to the Board are made in terms of a formal and transparent process.

As recommended by King III, the independence of the non-executive directors was assessed by the Board, assisted by the nomination committee. All non-executive directors meet the criteria set out in King III for determining their independence in fulfilling their duties towards the company.

Independent advice

There is an agreed procedure for directors to seek professional independent advice at the company’s expense.

Board effectiveness

An appraisal of the effectiveness of the Board was conducted externally during the year. The appraisal was benchmarked against the strategic requirements of Murray & Roberts to ensure the capacity to deliver these requirements and strengthen the diversity and sector expertise of directors. The appraisal was positive and its recommendations are being followed through for implementation. The appraisal next year will be conducted internally.

Orientation program

It has been the practice of the Group to ensure that non-executive directors appointed to the Board engage in an induction process to familiarise themselves with the Group. The process includes visits to key operations in the company and extensive discussions with group leaders.

Group secretary

All directors have access to the advice and services of the group secretary who is responsible for ensuring the proper administration of the Board and sound corporate governance procedures. All directors have full and timely access to information that may be relevant to the proper discharge of their duties. The group secretary provides guidance to the directors on their responsibilities within the prevailing regulatory and statutory environment and the manner in which such responsibilities should be discharged.

Executive committee

The directors of Murray & Roberts Limited and Murray & Roberts International Limited serve as the members of the executive committees of the Board. Meetings are chaired by the group chief executive and group financial director, respectively. The directors support the group chief executive in his responsibility to:

implement the strategies and policies of the Group
manage the business and affairs of the Group
prioritise the allocation of capital, technical know-how and human resources
establish best management practices and functional standards
approve and monitor the appointment of senior management
fulfil any activity or power delegated to the executive committee by the Board that conforms to the company’s articles of association

Risk management, systems of control and internal audit

The Board promotes the rational engagement of risk in return for commensurate reward and is responsible for ensuring that risk management, including related systems of internal control, are formalised throughout the Group. These systems of risk management, internal control and internal auditing aim to promote the efficient management of operations, protection of the Group’s assets, legislative compliance, business continuity, reliable reporting and the interests of all stakeholders. Details of the Group’s risk management status are set out on page 120 of this report.

Share dealings

The Group has an insider trading policy that requires directors and officers who could be expected to have access to price sensitive information, to be precluded from dealing in the Group’s shares as well as the shares of Clough Limited for a period of approximately two months prior to the release of the Group’s interim results and a period of three months prior to the release of the Group’s annual results. To ensure that dealings are not carried out at a time when other price sensitive information may be known, directors, officers and participants in the share incentive scheme must at all times obtain permission from the chairman, group chief executive or group financial director before dealing in the shares of the Group. Approved dealings in the Group’s shares by directors are disclosed to the JSE and published on the Stock Exchange News Services (SENS) of the JSE Limited. All approved director dealings are reported in arrears to the scheduled meetings of the Board.